A look at the economics of breeding, selling and racing thoroughbreds, and at the various players in the racing game, from race track operators to state governments to those of us who are crazy enough to own and/or place a bet on these gorgeous, courageous equine athletes.

Friday, September 7, 2012

Dutrow, NYRA and the Law

Back in November, 2010, investigators for the New York State Racing and Wagering Board found three syringes, loaded with the sedative/analgesic xylazine, in trainer Dick Dutrow desk at Dutrow's Aqueduct barn. The same month, one of Dutrow's horses, Fastus Cactus, tested positive for butorphanol, an opioid pain reliever often used together with xylazine. By that time, Dutrow had accumulated a variety of violations in at least nine states and at least 15 race tracks.

In the fullness of time (i.e., by October, 2011), the NYSRWB suspended Dutrow's training license for 10 years, but the suspension was stayed pending his appeal to the courts. On July 19, 2012, the Appellate Division of the New York Supreme Court unanimously rejected the appeal, but still Dutrow continues to train from his Aqueduct base while his lawyers pursue an all-but-certain defeat in the Court of Appeals, the state's highest court. Kentucky, meanwhile, rejected Dutrow's application for a trainer's license there in April of 2011, but unlike license suspensions, mere refusals to license are not honored by other states.

In the press and to the public, Dutrow is the bad boy of Thoroughbred racing, the guy who just can't bring himself to play by the rules. And the seemingly interminable legal process just adds to the frustration of those, including most owners and trainers, who desperately want to clean up racing's image. As we approach the second anniversary of Dutrow's dual violations, he continues near the top of the trainer standings, meet after meet.

So what could have been done? NYRA could, and should have denied Dutrow stalls, at a minimum, and possibly barred him from entering horses. That could have been done promptly, with adequate due-process protection for Dutrow, but without the years-long delay that the NYSRWB proceeding has involved. Here's how and why, but for the ineffectiveness (at best) of NYRA's legal department, it should have happened.

[Note: much of the legal background to what follows is contained in Bennett Liebman's invaluable article, "The Supreme Court and Exclusions by Racetracks," published in the Villanova Sports and Entertainment Law Journal in 2010. I've been unable to find a freely available copy online, but lawyers can access it through WestLaw and Lexis.]

As is generally known, race tracks have historically enjoyed a broad right to exclude persons from the track, as long as the grounds for exclusion weren't illegal. The principle was blessed by no less than Chief Justice Oliver Wendell Holmes in the 1913 US Supreme Court decision, Marrone v. Washington Jockey Club. Under Marrone, which still retains its legal vitality in many respects, most race track managements can do pretty much whatever they want in determining whether a patron (i.e., fan, bettor) can be barred from the track. In the case of licensees like trainers and jockeys, though, the track's options are somewhat limited -- though not so much that NYRA couldn't act to deny stalls to Dutrow.

The key New York precedent is Jacobson v. NYRA, a 1973 Court of Appeals case involving Howard "Buddy" Jacobson, father of current NYRA trainer David Jacobson. (For some background on Buddy Jacobson's colorful career, both on and off the track, click here. The Court of Appeals decision can be found here for those without WestLaw or Lexis.) Jacobson's license had been restored after a suspension, but NYRA nonetheless denied him stalls at the track. Jacobson argued that NYRA couldn't deprive him of his livelihood without due process, and the court agreed, holding both (1) that NYRA, because of its exclusive franchise, monopoly position and extensive regulation by the state, was essentially a "state actor," in other words, just the same as a government agency, and (2) that NYRA was therefore required to provide due process to anyone that it deprived of property interests.

But that decision also said that due process would be satisfied if NYRA offered a hearing, and commented that at such a hearing, "it would be [the trainer's] heavy burden to prove that the denial of stall space was not a reasonable discretionary business judgment but was actuated by reasons other than those relating to the best interests of racing generally."

The Jacobson decision is still good law, and was applied in the 1983 case of Larry Saumell, a jockey who somewhat carelessly let a "battery" slip to the ground near the starting gate, where the track vet picked it up and was promptly and literally shocked. To exclude a licensee, like a trainer or jockey, who has not (yet) been suspended by the NYSRWB, NYRA must indeed offer due process, including a hearing, with a reasonable time for the licensee to present evidence, but once that due process has been provided, there's no absolute barrier to excluding the bad actor.

Similar standards have been adopted by courts in California, Illinois and New Jersey. In addition, some cases have held that a race track cannot use exclusion as a means of defaming a licensee or tortiously interfering with a licensee's business. But, despite these limitations, it still seems entirely doable for a track to deny stalls to a perceived bad actor, so long as, in Ben Liebman's words, it can provide a "reasonable justification" for the exclusion.

To be sure, NYRA is now, even more than it was in 1973, an arm of the state, given the recent state takeover of the NYRA Board of Directors. So perhaps an exclusion by NYRA, even if based on reasonable justification and after a hearing, could be challenged in court. But still, NYRA should at least have tried.

Undoubtedly, NYRA's lawyers -- the same people who gave former CEO Charlie Hayward such bad advice about the 1% takeout overcharge and about whether NYRA could keep its budget secret from state officials -- feared that any attempt to bar Dutrow would land them in court, perhaps a place where they're not altogether comfortable. But if all of us are serious about cleaning up racing, this was the place to start. It's a pity they didn't make the effort.

About Me

Steve has managed Castle Village Farm's racing partnerships since 1999, and has been going to the races since the 1950s. He;s active in horsemen;s and backstretch welfare organizations and, when he's not at the track, moonlights as a tax and trusts and estates lawyer and a law professor.